Will the Last Linux Firm Please Turn Out the Lights?

At first, Linux developers were all
about the purity of free software. Then, for many of them, it was all about becoming millionaires. Now it's just about trying to land a new job before their Linux company bites the dust.

At first, Linux developers were all
about the purity of free software. Then, for many of them, it was all about becoming millionaires. Now it’s just about trying to land a new job before their Linux company bites the dust.

It’s bad out there brethren and sisthren. (Yes, I know sisthren isn’t a real word, but it should be! I’ve loved it ever since I heard the Reduced Shakespeare Company use it in a skit.)

Technically, Linux is better than ever. Linux 2.4 really was a giant step forward. Whether you’re a KDE 2.2 or GNOME 1.4 fan, or even like running Windows on Linux (thank you Win4Lin), the Linux desktop is looking so sharp you could cut yourself.

Too bad technically better hasn’t won the race. With a stock market that’s as skittish as a colt with a horsefly after it, the Linux companies have seen their fortunes disappear as fast as Covad and PSINet. But, as I write this in late July, none of the big ones have crashed — yet.

It’s going to happen, though. Rain has to fall, the sun has to set, and most Linux companies will have to close up shop. You don’t need tarot cards to see it coming. All you have to do is read the news.

Take the embedded Linux market. To me, this market always made sense. Whether PC sales were up or down, businesses have always needed embedded processors. Competition in the embedded space is hard. There have been several great embedded OSes available for years (QNX, for example). However, the notion of an operating system and development environment that any decent Unix/Linux programmer can work in without having to learn its quirks sounds great.

And you know, it is great. It’s just too bad that great hasn’t translated into market share. The result? Lineo and MontaVista Software both cut staff this summer, and LynuxWorks wisely withdrew its IPO plans.

The stock market from hell hasn’t stopped some Linux companies. Mandrake launched an IPO for reasons beyond me. Though its stock will trade on the unregulated Euronext Marche Libre, I suspect its worth will drop from the IPO price of 6.20 Euros (about $5.41). Suspect? Heck, I know it will.

I’ve got nothing against Mandrake. Now that its focus is back on its popular, easy-to-use desktop Linux and off the educational market and server side, I think the company will do as well as any Linux company can — but that’s the point, isn’t it?

How well can any Linux company do? VA Linux fled the hardware business in late June. As much as I like Slashdot, Open Source Development Network, and the spiffy collaborative development system, SourceForge, can their combined resources keep VA Linux afloat? As much as I hate to say it, I doubt it. Whatever happens, no one from VA is going to become an option millionaire.

The same is also true of Caldera and Red Hat. Although Caldera keeps getting super-sized contracts (as in 4,000 units of OpenUnix for McDonald’s), they’re likely to be dropped from the NASDAQ by the time you read this. They’ve got the best business plan and some of the best people in the Linux biz, but to little avail. Their share price is less than a buck, and the NASDAQ doesn’t consort with penny stocks.

The sharks — legal firms that specialize in attacking troubled firms on behalf of the shareholders — are circling. Frankly, the only reason we see them around Caldera and not VA Linux and Red Hat is that Caldera has on board Ray Noorda, ex-CEO of Novell and a millionaire many times over. Thus, a win against Caldera could be very profitable — for the attorneys.

Does that leave Red Hat the best of the best on the market? Well, best is a comparative term. They are doing better than the rest, but you’re not going to see any option millionaires come out of there in 2001 or 2002.

So can you make money from Linux? Sure. Individuals can still do fine. System administrators and developers, relax. You may not be buying a Porsche, but you’re not going to be cramming for your MCSE exam either.

Of course, some companies will make it. With its high-caliber talent, I still wouldn’t vote against Caldera. Red Hat also has great people and is in even better financial shape. And, as we all know, the company that will probably profit the most from Linux in the long run is IBM. But when it comes to most of the pure Linux companies out there? Well, get ready to wave good-bye to them. I told you at the beginning that times were bad.

Steven J. Vaughan-Nichols is a longtime Unix guru and technology writer. He can be reached at sjvn@vna1.com.